<<My grandfather is 91 years old. He wants to give me an annuity that is currently worth $110,000. What would be the best way to proceed without tax or minimum tax penalty.>>

See a qualified estate planning tax pro. It may or may not be the best way to proceed. It's quite possible that it would be best for grandpa to cash out the annuity, pay the taxes at his (assumed) lower tax level, and gift you the cash.

There are also a number of different ways to skin this same cat. And you really need the help of a qualified professional to review all of the options to light the was for the "best" transfer. This really isn't a "do it yourself" type of situation.

You can read more about gift, inheritance and estate issues in the Taxes FAQ area.